John is an Asian 23-year-old male, and Ken is an Asian 43-year-old male. Both John and Ken are economics majors, and they graduated from the same college with the same GPA - John in 2006 and Ken in 1986. John and Ken are both financial advisers at the same brokerage firm. John earns $52,000 a year, and Ken earns $88,000 a year. Select the best explanation for this wage difference.

Question

Quizplus · Accepted Answer

Since John and Ken have the same qualifications, graduating from the same college with the same GPA and the same major, it is unlikely that John has more human capital than Ken. It is also unlikely that John is being discriminated against because he is young, as age is not a factor in assessing human capital. Therefore, the most plausible explanation for the wage difference is that Ken has more experience and therefore more human capital than John, leading to a higher salary.

John Is an Asian 23-Year-Old Male, and Ken Is an Asian